Gautam Duggad (Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404

Manish Poddar (Manish.Poddar@MotilalOswal.com); +91 22 3027 8029

5 June 2015

Update | Sector: Consumer

Nestle India CMP: INR5,997 TP: INR6,300 (+5%) Neutral

Food safety concerns muddy the waters Tangible (volume decline) + Intangible (Brand Equity) costs at stake

The event: In the past few days, various state Food Safety authorities have conducted quality tests on Maggi Noodles (Maggi) to ascertain whether Lead and Monosodium Glutamate (MSG) levels are within permissible limits or not. The controversy erupted when the Lucknow Food Safety and Drug Administration found excess lead and MSG in Maggi after a few samples were subjected to tests at Kolkata’s referral laboratory. Several other state governments have conducted tests on Maggi samples to check for any violation of the food safety standards and banned the product temporarily (Uttarakhand, Tamil Nadu, Kerala, Gujarat, Delhi, Madhya Pradesh, Bihar and J&K have issued a notification to ban the manufacture, storage, distribution and sale of Maggi). The controversy has reportedly hurt sales as several retailers (such as WalMart, Big Bazaar, Reliance and Metro) have pulled Maggi off the shelves; the company is also facing a backlash on social media websites.

Nestle India’s initial response: Nestle India has defended itself and stated that (press release appended in the note) as per internal tests conducted on 1000 batches and independent lab test on 600 batches, Maggi is safe to eat with lead levels well within the food safety limits specified by the Indian authorities. However it has temporarily taken Maggi off the shelves till the probe is over, citing “consumer confusion” around the product and emphasized that the trust of the consumer and safety of the products remains its top priority. At today’s press conference, Nestle’s Global CEO Paul Bulcke stated that the company maintains the same food safety and quality assurance standards for Maggi across the world, and it is deciphering the reason for discrepancies in the company test results and those conducted by the government authorities.

Likely impact of the controversy: Even as we believe that Nestle will eventually tide over the crisis by addressing additional requirements of the authorities, we are of the view that the controversy around the product has impacted the brand’s iconic status in the interim. Prepared Dishes & Cooking Aids forms 29% of sales and Instant Noodles constitutes ~75-80% of the segment revenues, in our view. Thus, we estimate that Maggi Noodles contributes ~20% of revenues and ~25% of operating profit. Besides the obvious impact on sales, the crisis could also hurt the operating leverage of Nestle as Prepared Dishes & Cooking Aids was the only segment during CY14 that was growing in volumes. However, we believe that the impact on brand equity is more devastating because Maggi is widely consumed by kids and restoring consumer trust could take time.

BSE Sensex S&P CNX 26,768 8,115

Stock Info Bloomberg NEST IN

Equity Shares (m) 96.4

52-Week Range (INR) 7500/4755

1, 6, 12 Rel. Per (%) -9/1/17

M.Cap. (INR b) 578.2

M.Cap. (USD b) 9.1

AvgVal. INRm/Vol‘000 188/31

Free float (%) 37.2

Financial Snapshot (INR Billion) Y/E Dec 2014E 2015E 2016E Net Sales 98.1 109.0 123.6 EBITDA 20.6 25.1 29.1 Adj PAT 12.6 15.4 18.3 EPS (INR) 130.2 160.2 190.0 Growth (%) 6.8 23.0 18.6 BV/Sh. (INR) 294.3 327.7 366.8 RoE (%) 48.2 51.5 54.7 RoCE (%) 53.7 70.3 74.4 P/E (x) 46.0 37.4 31.6 P/BV (x) 20.4 18.3 16.3

Shareholding pattern (%) As on Mar-15 Dec-14 Mar-14 Promoter 62.8 62.8 62.8

DII 4.5 4.7 5.3

FII 12.5 13.8 13.7 Others 20.2 18.7 18.3 FII Includes depository receipts

Stock Performance (1-year)

Investors are advised to refer through disclosures made at the end of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Nestle India

5 June 2015 2

FSSAI order: FSSAI has ordered Nestle to take the following steps: a) Withdraw and recall all the nine approved variants of Maggi Instant Noodles from the market and stop further production, processing, import, distribution and sale of the product with immediate effect; b) remove “No added MSG” label from the existing packaging; c) withdraw and recall “Maggi Oats Masala Noodles with Tastemaker” for which risk/safety assessment has not been undertaken and product approval has not been granted; d) withdraw with immediate effect any other Nestle food product from market for which risk assessment has not been undertaken; e) submit a compliance report within three days and furnish progress reports on the recall process on a daily basis thereafter till the process is completed.

Valuation and View: We await Nestle’s response to FSSAI order and keep our estimates unchanged at this stage. We understand this issue could also impact the performance of other products in the prepared dishes portfolio for Nestle in the near term (Pasta, Soup, Ketchup, etc). Have valuations reached a stage where “great franchise going through crisis and should be bought” thesis can be applied? We believe valuations haven’t corrected adequately yet (despite the ~20% correction from recent peak) to make the risk/reward favorable. The Stock trades at 37x CY15E and 32x CY16E EPS. We will await better entry points to turn more constructive on the stock. Recent operating performance has been sluggish (three-year volume CAGR of 0.7%). Maintain Neutral with a revised target price of INR6300 (33x CY16 EPS; we reduce our target P/E from 38x to 33x to keeping in mind the uncertainty). We note that our estimates can change materially depending on the outcome of this case and Nestle’s decision on timelines to keep the product off the shelves.

Exhibit 1: Change in EPS assuming 25% volume decline for Prepared Foods and Dishes segment in CY15E

2010 2011 2012 2013 2014 2015E

Existing EPS 86.8 105.7 114.1 121.9 130.2 160.2

EPS if Prepared Dishes volumes decline 25%

140.9

Change in EPS (%)

(12.0)

Note: Cadbury revenues declined by 30% due to worms controversy in 2003 Source: Company, MOSL

Nestle India

5 June 2015 3

Key takeaways from today’s press conference of Nestle’s CEO Paul Bulcke Maggi Noodles are safe to eat. No MSG is added during manufacturing. Taken Maggi off the shelves temporarily, until current situation is clarified. Trust

of consumers and safety of products is the top priority. Internal tests and independent tests conducted by the company indicate that

the product is safe and well within the food safety limits specified by the Indian authorities.

Nestle is undertaking additional tests to ensure there is no problem. No sharing of the test reports formally yet. Open to any kind of facility check

that the government wants to undertake. Same food safety and quality assurance standards maintained for Maggi across

the world. Been in India for more than 100 years. India is important for Nestle. Not taking

Maggi off from shelves in other countries. Will come out with new packaging without the “No added MSG” label. Highlights from statement of India Food Safety and Standards Authority (FSSAI) FSSAI has directed to Nestle for the following course of action given their findings: Withdraw and recall all the nine approved variants of Maggi Instant Noodles

from the market and stop further production, processing, import, distribution and sale of the product with immediate effect.

Remove of the “No added MSG” label from the existing packaging to comply with the related labelling regulations.

Withdraw and recall “Maggi Oats Masala Noodles with Tastemaker” for which risk/safety assessment has not been undertaken and product approval has not been granted.

Withdraw with immediate effect any other Nestle food product from the market for which risk assessment has not been undertaken.

Ssubmit a compliance report within three days and furnish progress reports on the recall process on a daily basis thereafter till the process is completed.

Key Takeaways from ConCall with Mr. Chandra Bushan, Centre for Science and Environment (CSE) We recently hosted Mr Chandra Bushan, Deputy Director General of Center for Science and Environment, to discuss more on the “Ongoing probe of Harmful substances in Packaged Foods”. Following are the key takeaways: Four categories that food safety covers: a) Processed foods, b) agro chemicals

(pesticides in raw food commodities like rice, vegetables), c) proprietary foods (energy drinks, energy boosters, malt beverages), and d) organic foods.

Indian regulatory regime not updated for processed foods. Maggi tests done on standards that are 15 years old.

Nestle India

5 June 2015 4

UP case: Lead content found in Maggi, so the case should go to a logical conclusion and Maggi should pay fine. This case could impact the brand image of Maggi. Delhi has banned Maggi in schools.

Controversy like Maggi is just a beginning; regulators are looking for stricter rules. Expect standards to come in for different products categories that claim “use of a certain product results in increase in height” (malted beverages segment).

Wholesale changes to be made in the next five years in domestic as well as imported processed foods categories.

Bottled water standards in India are currently the best in the world.

Exhibit 2: Press Statement issued by Nestle India stating that Maggi Noodles is safe but still deciding to take the product off the shelves citing trust of consumer and safety and quality of products being the foremost priority (dated 5th June 2015)

Source: Company, MOSL

Nestle India

5 June 2015 5

Exhibit 3: Press Statement issued by Nestle India stating extensive test results do not reveal excess lead in Maggi Noodles (dated 1th June 2015)

Source: Company, MOSL

Exhibit 4: Nestle India’s Webpage providing further details on Maggi

Source: Company, MOSL

Nestle India

5 June 2015 6

Story in charts

Exhibit 5: Overall sales growth lowest since CY04; led by price/mix

Source: Company, MOSL

Exhibit 6: Volume growth lowest in last 14 years

Source: Company, MOSL

Exhibit 7: Volume growth CAGR muted over the last three years CAGR (%) 2004-14 2009-14 2011-14

Volume 8.3 5.0 0.7

Pricing 6.8 8.7 8.9

Sales 15.6 14.2 9.7

Source: Company, MOSL

Exhibit 8: Increased volume contribution from Prepared Dishes

Source: Company, MOSL

Exhibit 9: Sales contribution of Milk products increased in CY14

Source: Company, MOSL

Exhibit 10: Gross margin contracted 70bp YoY..

Source: Company, MOSL

Exhibit 11: ..while EBITDA margins were down 90bp YoY

Source: Company, MOSL

14.5

6.6 11.4

4.1

11.4 11.4

23.9 22.6 16.8

22.1 20.3

11.8 9.3 8.0

-10.0

0.0

10.0

20.0

30.0

CY01

CY02

CY03

CY04

CY05

CY06

CY07

CY08

CY09

CY10

CY11

CY12

CY13

CY14

Price Growth (%) Sales Growth (%)

16.0 12.2

10.2

5.1 4.9 8.3

13.8 16.9

14.9 17.0

6.8

0.8 1.9

(0.6)

CY01

CY02

CY03

CY04

CY05

CY06

CY07

CY08

CY09

CY10

CY11

CY12

CY13

CY14

Volume Growth (%)

37.6 34.6 33.2 31.2 30.3 29.7

6.5 6.3 6.0 5.6 6.0 5.4

43.6 46.3 49.1 52.6 53.5 55.8

12.4 12.8 11.8 10.6 10.2 9.0

CY09 CY10 CY11 CY12 CY13 CY14

Milk Products/ Nutrition Beverages Prepared Dishes Chocolate & Conf.

44.3 43.5 43.7 45.0 43.4 45.2

15.4 14.1 13.9 13.1 14.1 13.2

25.6 27.1 28.1 28.3 28.8 29.2

14.8 15.3 14.3 13.6 13.7 12.4

CY09 CY10 CY11 CY12 CY13 CY14

Milk Products/ Nutrition Beverages Prepared Dishes Chocolate & Conf.

53.0

51.8 51.2

52.1

51.0

51.8

54.3 54.3 53.6

CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14

Gross Margin (%)

19.2 19.9 20.0 20.2 20.0

20.7

22.0 21.9

21.0

CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14

EBITDA Margin (%)

Nestle India

5 June 2015 7

Exhibit 12: Nestle’s segment-wise performance 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Volume

Milk Products 96,750 99,371 102,243 107,736 118,651 134,142 144,397 147,984 140,386 138,772 135,591

Beverages 24,994 24,606 22,342 24,107 24,114 23,369 26,458 26,692 25,353 27,717 24,673

Prepared Dishes & Cooking Aids 60,463 65,603 78,706 98,259 127,835 155,555 193,494 219,041 236,554 245,443 254,553

Chocolate & Confectionery 23,575 26,246 30,402 35,752 40,200 44,116 53,483 52,678 47,745 46,718 41,080

Total 205,782 215,826 233,693 265,854 310,800 357,182 417,832 446,395 450,038 458,650 455,897

Volume Growth

Milk Products 7.4% 2.7% 2.9% 5.4% 10.1% 13.1% 7.6% 2.5% -5.1% -1.1% -2.3%

Beverages -4.0% -1.6% -9.2% 7.9% 0.0% -3.1% 13.2% 0.9% -5.0% 9.3% -11.0%

Prepared Dishes & Cooking Aids 3.8% 8.5% 20.0% 24.8% 30.1% 21.7% 24.4% 13.2% 8.0% 3.8% 3.7%

Chocolate & Confectionery 9.9% 11.3% 15.8% 17.6% 12.4% 9.7% 21.2% -1.5% -9.4% -2.2% -12.1%

Total 5.1% 4.9% 8.3% 13.8% 16.9% 14.9% 17.0% 6.8% 0.8% 1.9% -0.6%

Price

Milk Products 111 118 126 146 163 172 192 226 275 293 337

Beverages 211 237 271 299 332 344 340 400 443 478 543

Prepared Dishes & Cooking Aids 70 76 76 79 82 86 89 98 103 110 116

Chocolate & Confectionery 147 147 150 159 169 175 182 209 245 275 305

Total 115,307 122,501 125,986 137,187 143,857 146,212 152,611 171,901 190,692 204,510 222,188

Price Growth

Milk Products 1.6% 6.1% 6.3% 16.3% 11.7% 5.4% 11.6% 17.8% 21.4% 6.7% 15.0%

Beverages 0.8% 12.1% 14.4% 10.6% 10.9% 3.6% -1.2% 17.8% 10.6% 7.9% 13.7%

Prepared Dishes & Cooking Aids -1.0% 9.9% -0.7% 4.6% 3.5% 4.3% 3.9% 10.3% 4.4% 7.0% 5.8%

Chocolate & Confectionery -6.3% -0.3% 2.3% 6.1% 6.3% 3.5% 4.3% 14.4% 17.3% 12.4% 10.8%

Total -0.9% 6.2% 2.8% 8.9% 4.9% 1.6% 4.4% 12.6% 10.9% 7.2% 8.6%

Sales (INR m)

Milk Products 10,781 11,752 12,857 15,756 19,388 23,113 27,763 33,510 38,594 40,712 45,752

Beverages 5,274 5,822 6,048 7,219 8,009 8,042 8,994 10,684 11,227 13,241 13,398

Prepared Dishes & Cooking Aids 4,206 5,017 5,980 7,811 10,519 13,350 17,250 21,545 24,302 26,982 29,613

Chocolate & Confectionery 3,465 3,845 4,557 5,686 6,795 7,719 9,759 10,997 11,696 12,864 12,532

Total 23,728 26,439 29,442 36,472 44,711 52,224 63,766 76,736 85,819 93,799 101,295

Sales Growth

Milk Products 9.1% 9.0% 9.4% 22.6% 23.0% 19.2% 20.1% 20.7% 15.2% 5.5% 12.4%

Beverages -3.2% 10.4% 3.9% 19.4% 10.9% 0.4% 11.8% 18.8% 5.1% 17.9% 1.2%

Prepared Dishes & Cooking Aids 2.7% 19.3% 19.2% 30.6% 34.7% 26.9% 29.2% 24.9% 12.8% 11.0% 9.7%

Chocolate & Confectionery 2.9% 11.0% 18.5% 24.8% 19.5% 13.6% 26.4% 12.7% 6.4% 10.0% -2.6%

Total 4.1% 11.4% 11.4% 23.9% 22.6% 16.8% 22.1% 20.3% 11.8% 9.3% 8.0%

Source: Company, MOSL

Nestle India

5 June 2015 8

Exhibit 13: Financial Overview of Nestle India

CY09 % CY10 % CY11 % CY12 % CY13 % CY14 %

Total Revenues 51,294 100.0 62,547 100.0 74,908 100.0 83,023 100.0 90,619 100.0 98,063 100.0 Raw Material Consumed

Milk/SMP 8,675 16.8 10,830 17.3 9,044 12.0 9,215 11.1 8,281 9.1 11,202 11.4 Raw coffee/Green Coffee 2,152 4.2 2,277 3.6 3,091 4.1 3,257 3.9 3,714 4.1 3,783 3.8 Sugar 1,428 2.8 2,062 3.3 1,863 2.5 2,067 2.5 1,961 2.2 1,778 1.8 Wheat flour 1,934 3.8 2,613 4.2 3,106 4.1 3,698 4.4 4,306 4.7 4,468 4.5 Vegetable Oils 1,662 3.2 2,003 3.2 3,235 4.3 3,261 3.9 3,373 3.7 3,509 3.6 Packaging Material 3,838 7.5 4,827 7.7 5,907 7.9 6,300 7.6 7,034 7.7 7,582 7.7 Others 4,796 9.3 5,942 9.5 9,705 12.9 9,964 12.0 12,556 13.8 12,918 13.1 Gross Profit 26,810 52.1 31,992 51.0 38,957 51.8 45,259 54.3 49,396 54.3 52,823 53.6 Employee Benefit Expense 4,489 8.7 4,585 7.3 5,717 7.6 6,877 8.3 7,672 8.4 8,577 8.7 Other Expenses

Power and Fuel 1,589 3.1 2,192 3.5 2,958 3.9 3,709 4.5 3,854 4.2 3,843 3.9 Repairs 578 1.1 712 1.1 754 1.0 930 1.1 962 1.1 1,031 1.0 Advertising & Sales Promotion 2,675 5.2 3,026 4.8 3,226 4.3 3,559 4.3 3,955 4.3 4,455 4.5 Freight and Transport 2,404 4.7 2,996 4.8 3,525 4.7 3,842 4.6 4,374 4.8 4,795 4.9 Royalty 2,033 3.9 2,491 4.0 2,832 3.8 3,173 3.8 3,396 3.7 3,863 3.9 Others 2,698 5.2 3,493 5.6 4,416 5.9 4,912 5.9 5,379 5.9 5,647 5.7 EBITDA 10,345 20.1 12,497 19.9 15,528 20.7 18,257 21.9 19,804 21.8 20,612 21.0 Less: Interest Expense 14 11

51

266

365

142

Less: Depreciation 1,113 1,278

1,533

2,772

3,300

3,375 Add: Other Income 378 427

509

633

1,222

1,359

Profit before Tax (PBT) 9,596 18.6 11,635 18.5 14,452 19.2 15,852 19.0 17,362 19.1 18,454 18.7 Tax 2,620 3,264

4,264

4,847

5,609

5,897

Profit after Tax (PAT) 6,976 13.5 8,370 13.3 10,189 13.6 11,006 13.2 11,753 12.9 12,557 12.7

Source: Company, MOSL

Nestle India

5 June 2015 9

Financials and valuations

Income Statement 20.9% (INR Million)

Y/E December 2010 2011 2012 2013 2014 2015E 2016E

Net Sales 62,547 74,908 83,023 90,619 98,063 109,015 123,614

Change (%) 21.9 19.8 10.8 9.1 8.2 11.2 13.4

Total Expenditure 50,051 59,381 64,766 70,815 77,450 83,928 94,498

EBITDA 12,497 15,528 18,257 19,804 20,612 25,087 29,117

Change (%) 20.8 24.3 17.6 8.5 4.1 21.7 16.1

Margin (%) 20.0 20.7 22.0 21.9 21.0 23.0 23.6

Depreciation 1,278 1,533 2,772 3,300 3,375 3719 3,794

Int. and Fin. Ch. 11 51 266 365 142 44 61

Other Inc.- Rec. 427 509 633 1,222 1,359 1,558 1,871

PBT 11,635 14,452 15,852 17,362 18,454 22,883 27,134

Change (%) 21.2 24.2 9.7 9.5 6.3 24.0 18.6

Margin (%) 18.6 19.3 19.1 19.2 18.8 21.0 22.0

Tax 3,264 4,264 4,847 5,609 5,897 7,437 8,818

Tax 3,252 4,161 3,728 5,075 5,824 7,214 8,554

Deferred Tax 13 102 1,119 534 73 223 265

Tax Rate (%) 28.1 29.5 30.6 32.3 32.0 32.5 32.5

Adjusted PAT 8,370 10,189 11,006 11,753 12,557 15,446 18,315

Change (%) 20.0 21.7 8.0 6.8 6.8 23.0 18.6

Margin (%) 13.4 13.6 13.3 13.0 12.8 14.2 14.8

Non-rec. (Exp)/Inc. 184 573 327 582 710 764 841

Reported PAT 8,187 9,616 10,679 11,171 11,847 14,682 17,475

Balance Sheet

(INR Million)

Y/E December 2010 2011 2012 2013 2014 2015E 2016E

Share Capital 964 964 964 964 964 964 964

Reserves 7,590 11,775 17,020 22,723 27,408 30,633 34,404

Net Worth 8,554 12,740 17,984 23,687 28,372 31,597 35,368

Loans 0 9,709 10,502 11,895 196 600 500

Capital Employed 8,554 22,448 28,486 35,582 28,568 32,197 35,868

Gross Block 18,547 25,522 44,276 49,032 50,090 51,788 53,597

Less: Accum. Depn. 8,420 9,765 12,233 15,339 18,323 22,042 25,836

Net Fixed Assets 10,127 15,758 32,043 33,693 31,766 29,746 27,761

Capital WIP 3,489 13,718 3,441 2,947 2,448 2,448 2,448

Investments 1,507 1,344 3,649 8,511 8,118 10,056 12,459

Current 1,507 1,344 3,649 6,270 5,074 6,342 7,928

Non-current 0 0 0 2,241 3,045 3,714 4,532

Curr. Assets, L&A 10,460 13,199 12,507 17,992 15,863 26,939 35,767

Inventory 5,760 7,340 7,456 7,359 8,441 9,488 10,620

Account Receivables 633 1,154 876 843 991 1,388 1,749

Cash and Bank Balance 2,553 2,272 2,370 7,494 4,458 13,472 20,078

Others 1,514 2,432 1,806 2,296 1,972 2,590 3,320

Curr. Liab. and Prov. 16,696 21,067 21,532 25,406 27,400 34,542 39,852

Account Payables 7,454 4,808 5,394 6,330 7,287 7,720 8,786

Other Liabilities 167 5,287 5,580 5,003 4,096 4,505 5,108

Provisions 9,075 10,972 10,558 14,073 16,017 22,318 25,959

Net Curr. Assets -6,236 -7,869 -9,025 -7,414 -11,537 -7,603 -4,085

Def. Tax Liability -333 -502 -1,621 -2,155 -2,227 -2,450 -2,715

Appl. of Funds 8,554 22,448 28,486 35,582 28,568 32,197 35,868

E: MOSL Estimates

Nestle India

5 June 2015 10

Financials and valuations

Ratios Y/E December 2010 2011 2012 2013 2014 2015E 2016E

Basic (INR)

EPS 86.8 105.7 114.1 121.9 130.2 160.2 190.0

Cash EPS 100.1 121.6 142.9 156.1 165.2 198.8 229.3

BV/Share 88.7 132.1 186.5 245.7 294.3 327.7 366.8

DPS 48.5 48.5 48.5 48.5 63.0 102.0 122.0

Payout (%) 55.9 45.9 42.5 39.8 48.4 63.7 64.2

Valuation (x)

P/E 69.1 56.8 52.5 49.2 46.0 37.4 31.6

Cash P/E 59.9 49.3 42.0 38.4 36.3 30.2 26.2

EV/Sales 9.2 7.8 7.0 6.3 5.8 5.1 4.4

EV/EBITDA 45.9 37.6 31.9 29.0 27.5 22.1 18.8

P/BV 67.6 45.4 32.2 24.4 20.4 18.3 16.3

Dividend Yield (%) 0.8 0.8 0.8 0.8 1.1 1.7 2.0

Return Ratios (%)

RoE 116.5 95.7 71.6 56.4 48.2 51.5 54.7

RoCE 156.1 90.3 60.8 51.5 53.7 70.3 74.4

Working Capital Ratios

Debtor (Days) 3.6 5.5 3.7 3.3 3.6 4.5 5.0

Asset Turnover (x) 8.4 4.7 3.1 2.7 2.9 3.3 3.4

Leverage Ratio

Debt/Equity (x) 0.0 0.8 0.6 0.5 0.0 0.0 0.0

Cash Flow Statement

(INR Million)

Y/E December 2010 2011 2012 2013 2014 2015E 2016E

OP/(loss) before Tax 11,219 13,994 15,485 16,505 17,237 21,369 25,323

Int./Div. Received 427 509 633 1,222 1,359 1,558 1,871

Depn. and Amort. 974 1,345 2,468 3,106 2,985 3,719 3,794

Interest Paid 11 51 266 365 142 44 61

Direct Taxes Paid 3,252 4,161 3,728 5,075 5,824 7,214 8,554

Incr in WC -1,397 -882 -996 -2,892 -474 -4,316 -2,246

CF from Operations 10,754 12,518 15,588 18,285 16,089 23,704 24,620

Incr in FA 4,832 17,204 8,476 4,262 559 1,698 1,809

Free Cash Flow 5,922 -4,686 7,112 14,022 15,530 22,005 22,811

Pur of Investments -526 -163 2,305 4,862 -393 1,938 2,403

CF from Invest. -4,306 -17,041 -10,781 -9,125 -166 -3,636 -4,212

Incr in Debt -6 9,709 793 1,393 -11,699 404 -100

Dividend Paid 5,448 5,435 5,435 5,471 7,106 11,457 13,704

Others 3 -32 -68 42 -152 0 0

CF from Fin. Activity -5,451 4,242 -4,710 -4,036 -18,958 -11,053 -13,804

Incr/Decr of Cash 997 -281 97 5,124 -3,035 9,014 6,605

Add: Opening Balance 1,556 2,553 2,272 2,370 7,494 4,458 13,472

Closing Balance 2,553 2,272 2,369 7,494 4,458 13,473 20,077

E: MOSL Estimates

Nestle India

5 June 2015 11

N O T E S

Nestle India

5 June 2015 12

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